We are witnessing the most massive earthquake of the social and political order in Eastern Europe. It is on a scale reminiscent of 1848 and 1917.

In 1848 there was revolution in France, Germany, Austria and Hungary, and a massive impact elsewhere. The 1917 Russian Revolution was followed by revolution in Germany, Austria and Hungary and had an international impact on an even greater scale.

To understand an earthquake you have to look at the pressure inside the system. It is summed up with Marx’s statement that when the social system becomes a brake on the development of the productive forces, the epoch of the social revolution starts.

Marx put the emphasis on the word “epoch”. It is not a question of one day or one year – it is a long process of tens of years, for as long as the social system is a brake on the productive forces.

Why do the state capitalist regimes act as a brake? In the USSR itself the annual rate of growth of the gross national product between 1950 and 1959 was 5.8 percent. In the period 1970-78 it was down to 3.7 percent. In 1980-82 it was down to 1.5 percent. My guess is that over the Last three or four years there was a negative rate of growth.

The manufacturing working class in the USSR is nearly a third larger than that of the US. The number of technicians in Russian manufacturing industry is twice that of the US. Yet the output is half that of the US.

Thirty percent of the population of the USSR are in agriculture compared with 4 percent in the US. But the 4 percent produce enough food for the US, plus exports. Russia, by comparison, is a net importer of food, even though the level of consumption is much lower.

The downturn and stagnation of the last two decades seem to be in complete contradiction to the experience of the Russian economy under Stalin, when the rate of growth was absolutely massive.

Stalin achieved such massive growth rates by putting the emphasis on heavy industry, on capital goods. Capital accumulation is the heart of the system-machinery to produce machinery to produce machinery.

The problem is that, despite the success, it also makes the system very rigid, because the emphasis is on volume of production.

Look at the steel industry in Britain. Enterprises are near to the sea because it saves on the cost of transport of coal and iron ore which are very heavy raw materials.

By contrast, the centre of diamond production is South Africa, while the centre of diamond distribution is Amsterdam. The fact that they are thousands of miles apart doesn’t make any difference as a small volume has a high value. The steel industry is different.

The biggest steel enterprise in the world is in the Urals, at Magnitogorsk. There is no coal there, therefore they bring the coal from thousands of miles away over land. The second biggest steel enterprise in Russia is in the Donbass, in the Ukraine. There is a Lot of coal but no iron, so they bring the iron thousands of miles.

The cost of transport must be 30, 40 or 50 times higher than the value of the final product. This is a fantastic waste. Steel is kept artificially cheap. The massive subsidy to these industries has become a formidable burden on the whole economy.

Another example of irrationality is that two plants in Russia produce a bolt 12 mm by 60 mm in size. One charges 10 kopeks for it. The other produces exactly the same bolt and charges 140 roubles, 14 times dearer. (sic – MIA)

In Britain the difference between the price of Daz and Persil is perhaps 5 percent. If there was a difference of 1,300 percent, one of them would go bankrupt.

The problem in the USSR is that, as long as there was expansion of resources, growth could be maintained by employing more people, using more raw materials and building more factories.

However, once you need to increase the intensity of production, or productivity – to increase output per worker or per unit of capital, in other words to shift from extensive to intensive growth – then the picture is completely different. The extensive method simply doesn’t work.

Look what has happened in agriculture. Total agricultural output never rose under Stalin. When he died in 1953 the total agricultural output of Russia was a little lower than it was in 1928, before collectivisation. However, collectivisation still worked for Stalin as it transferred millions of people, and with them food, from the countryside to the town.

In order to syphon off the food from the countryside he had to organise the peasants into collective farms. There was no way of controlling 26 million peasant families, forcing them to deliver the grain, because they would have simply hidden it.

It is much easier to control 200,000 collective farms. But Stalin was worried that even the 200,000 couldn’t be controlled. The 500 families on each farm could agree among themselves to hide the grain to pretend they hadn’t produced 1,000 tons but only 600 tons.

He therefore organised to control the collective farms by setting up Machine Tractor Stations. Each of these state institutions looks after 20 or 30 collective farms. They did the ploughing and the harvesting.

It’s much easier to control 10,000 Machine Tractor Stations than 200,000 collective farms.

The problem is that the tractor driver can decide whether to plough a shallow or a deep furrow. If he ploughs a shallow one he can work much quicker and therefore get a bigger bonus. Nobody is going to be able to go and measure what he has done. If the yield is bad five months later no one can prove it was his fault. It could have been the weather.

The net result of the system is that Stalin’s attempt to control agriculture failed to improve output.

In 1959 the private plots of the collective farm members accounted for less than 1 percent of cultivated land. On these plots there is no machinery, not even a plough. There are no young workers, therefore they are very primitive. Yet in 1959 these plots produced 46.6 percent of all meat, 49.2 percent of all milk and 82.1 percent of the eggs produced in the country.

If Gorbachev could cut the labour force in agriculture from 30 percent of the population to, say, 10 percent, there would be a massive opportunity for increased production in industry. As he can’t do this, his emphasis must be on increasing industrial productivity and here is where the trouble starts.

Perestroika is about rationalising, making the economy lean and strong. Thatcher carried out a perestroika in Britain in 1979-81. She cut the labour force in manufacturing by over a fifth. Every capitalist country has perestroika. In Japan the capitalists closed factories, they opened new factories and they changed machinery. But because the Japanese economy is much more modern than the British economy, the restructuring can be much less traumatic. The Russian economy needs even more radical perestroika than that carried out by Thatcher.

When Boris Kagarlitsky was in London he spoke about the three main groups in the bureaucracy.

One of them says we need rationalisation, we need the market and we have to follow Swedish social democracy.

A second group argue for a much more radical restructuring – they are called Thatcherite marketeers.

However, according to Kagarlitsky, the biggest group, called the Pinochet Marketeers, says Thatcher is too soft. They want to introduce measures as radical as those carried out by General Pinochet in Chile.

A recent Channel 4 programme on the Polish economy featured the manager of the steel plant at Katowice. He said, “We have to learn from Ian McGregor.” He argued for a radical cut in the labour force and said he’ll only be happy when there are two workers looking for each job.

This is the logic of what Gorbachev has to do. In Britain they closed 20 to 25 percent of manufacturing capacity. In Russia they will have to do more. The estimate of 16 million unemployed as the result of perestroika is probably an underestimate.

The first opposition will come from the bureaucrats in the factories. Secondly, in order to overcome the resistance Gorbachev needs greater openness, glasnost. The trouble with glasnost is it gets out of control. Rulers rule by force and persuasion, with a whip and a carrot. They run into trouble when the whip is not strong enough and the carrot is not big enough.

When Stalin died Russia was still a graveyard in terms of political upheaval. Then in February 1956 Khrushchev denounced Stalin and started some measure of democratisation. The Hungarian uprising took place eight months later. Workers took the factories. They set up workers councils. They smashed the Hungarian police and army. Khrushchev gave them a finger and they took a hand. After that, of course, Khrushchev sent the tanks in.

This effect is nothing new. Alexander II came to the Russian throne in 1855 and promised freedom to the serfs, local government and freedom for women to go to universities. Alexander Herzen, the leading revolutionary democrat at the time, called Alexander II the “Tsar Liberator”. The only trouble is he gave freedom to the serfs but he did not give them the land. He gave local government but he didn’t allow the Poles national autonomy. Instead he sent the troops against them.

The result was that the Narodniks formed a large and active movement and Alexander II became the first tsar in the history of Russia to be murdered by revolutionaries, in 1881.

The problem with glasnost today for Russia s rulers is that it is opening the door to fantastic demands. Look at the workers in Vorkuta who have gone on strike against the law.

Glasnost opens the way for a flood of opposition and anger, both in Russia and the rest of Eastern Europe.

The explosion of the crisis is extremely fast. But the solution to the crisis is a long term matter This is because here again the past lives with us.

Stalin pushed history forward on a massive scale by creating a huge working class. The working class of Russia today is incomparably stronger in terms of size, concentration and power than the working class of 1917. At the same time there has been a massive regression in terms of ideas, workers organisation and living traditions.

This is why workers are extremely strong, yet are fighting for very elementary things that were raised as long ago as 1848: democratic rights, the right of assembly, the right of elections and the right of trade unions.

Even more important than this retrogression is the lack of a physical continuation of ideas. When Trotsky writes that the revolutionary party is the memory of the class he stresses the memory is not simply something hanging in the air – it is carried by human beings. They transfer their experience, tell one another about the books they read and so on.

One example of regression was the shocking picture of people carrying the banners of the tsar on the 7 November demonstrations in Moscow and Yaroslav. Even worse than that, in Lvov in the Western Ukraine during the summer they carried the blue and white banners of Petlura, a Ukrainian nationalist who killed 150,000 Jews in 1919.

The problem is that genuine communism, planning, and the red flag are all identified with an oppressive regime.

There is another problem for the revolutionaries, such as Boris Kagarlitsky and the thousands of others like him all over Eastern Europe. They find it extremely difficult to find their way in terms of ideas. They have to start practically from square one – there is no tradition.

The process of clarification will take time. There needs to be a process of political differentiation. Within Kagarlitsky’s group there are anarchists and people with a whole number of other political ideas. It took Marx years to break from the anarchist Bakunin. In the West today I don’t know of any organisation with both Marxists an anarchists in it. But in Russia they are together as there hasn’t yet been a process of differentiation.

In one way, the development of the workers movement is ver speedy and in another way it is extremely slow, because there is a 6< year desert to overcome. Socialists have to win ideas that were taken naturally in 1917 by masses of workers.

There is also an imbalance between the way in which workers can learn about some aspects of struggle extremely fast, but take much longer to generalise. The contradiction in people s brains is the result of a contradiction in their experience.

Russian workers have massive experience of solidarity in the factories. Basic democratic demands could therefore grow out of the situation. Everybody wants democratic and trade Union rights.

The problems are that when the issue goes beyond the immediate factory to be more general, then a whole number of things are missing. Here it is important to understand the attraction of the market.

When Russian workers compare their living standards with these abroad, they compare them with those in West Germany.

If they compared the housing situation in Moscow with Calcutta, where there are hundreds of thousands of people sleeping in the streets, they would say the market doesn’t work in Calcutta. But when the comparison is made with West Germany, the market seems very attractive.

When Lenin said revolutionary ideas must come to workers from outside, he meant from outside their immediate experience. In other words, to be a worker and fight for higher wages is natural. To fight against racism is not natural – it doesn’t come automatically. You must go beyond the immediate experience.

On 9 January 1905 in Russia the march to the Winter Palace was led by Father Gapon, a priest and a police agent. People didn’t know he was a police agent, hut they knew he was a priest and a prison priest at that. The demonstrators carried icons, not red flags. Instead of shouting, “Down with the tsar,” they cried, “We love you, our little father.”

The revolutionaries were a tiny minority a couple of hundred at the most. When the army shot 500 people dead the mass of people began to change.

It was a very quick jump from 9 January to the slogan of the soviet later that year: “Eight hours a day and a gun” The fact that people have to go through transition doesn’t mean the transition must take 500 years. As Lenin said, in one day of revolution workers change more than in a century.

There are massive problems for socialists in Eastern Europe to overcome. Even those we call revolutionaries will be mixed with centrists moving leftwards. There will not be a clear line of demarcation. We can expect to see centrists moving leftwards and then differentiation.

The experience of Poland shows that every time force is used the force is weakened. In 1980-8 1 the ruling class was not as confident as in 1956. The Russian army did not intervene. There is no question that they are terrified of using the 380,000 Russian troops in East Germany in the present situation.

Therefore they have to use both reform and repression. The miners went on strike so they rushed through a law which said strikes are illegal in the mines, on the railways, in the power industry. Then the miners broke the law, but they didn’t break it completely because only 18 pits in Vorkuta went on strike.

There will be ups and downs in the struggle. It is not a simple one way process. The miners strike committee in Kusbass in Siberia was against the strike. It was the workers who decided to go on strike. There is already a differentiation there among the militants.

The events in Eastern Europe are also having a massive impact in the West.

People say Thatcher and Kinnock are right to support the market, that planning doesn’t work and that socialism is old hat.

One Polish economist defined communism as a transition stage between capitalism and capitalism. From the West it looks as if socialism has no future as the regimes are falling to pieces. This is a massive boost to the right wing.

This is especially important because of the illusions much of the left has had in the Eastern regimes.

But this situation can also change radically if the workers strikes in Eastern Europe come to the fore. Then it will be clear that the class struggle is still the dominant factor in the whole situation.

State capitalism is vitally important as a theory. Anybody who thinks there is any form of socialism in Russia is in trouble. Even Ernest Mandel argued in 1956:

The Soviet Union maintains a more or less even rhythm of economic growth, plan after plan, decade after decade, without the progress of the past weighing on the possibilities of the future ... all the laws of development of the capitalist economy which provoke a slowdown in the speed of economic growth are eliminated.

Isaac Deutscher said in the same year that Russia’s standard of living would surpass that of Western Europe in the space of ten years. Anybody who believed these things is now completely demoralised. The assumption that Russia is more progressive than what everybody accepts as capitalism has fallen to pieces.

The importance of the theory of state capitalism is that it explains why the economy works the way it does. The emphasis on capital accumulation explains both the massive rate of growth and the impediments to future growth. As I wrote in 1963:

If by the term planned economy we understand an economy in which all component elements are adjusted and regulated into a single rhythm in which frictions are at a minimum and above all in which foresight prevails in the making of economic decisions, then the Russian economy is anything but planned. Instead of a real plan, strict methods of government dictation are involved in filling the gaps in the economy made by the decisions and activities of this very government. Therefore instead of speaking about a soviet planned economy, it would be much more exact to speak of a bureaucratically directed economy.

This explains the dynamic of the system, the capital accumulation, the creation of a working class. This is the strength of state capitalism. At the same time it becomes an impediment to the development of the productive forces, the most important productive force being the workers themselves.

Secondly, the theory prevents us being too impressionistic one way or another.

With all the break that Stalin brought in the Marxist tradition, these traditions are still alive. It is very interesting to hear Boris Kagarlitsky talk of the continuation in Vorkuta between the old Trotskyists, who were sent there to the biggest gulag, and their grandchildren who are miners.

Ideas cannot be smashed by tanks, by force alone. The ideas of Trotsky can be very much like a stream. The stream disappears from sight and then reappears miles later. The stream hadn’t dried up – it was just obscured from our sight below the surface.

The same applies to ideas. As Trotsky wrote in 1939, “The vengeance of history is much more terrible than the vengeance of the most powerful general secretary.” He has been proved right. Trotsky is smiling and Stalin is dead.